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Mortgage-Related Legal Questions

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Divorcing couples must address a number of mortgage-related legal questions.
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Breaking up is hard to do, and divorces get a whole lot more complicated when the two of you own a home together. Even if you and your former partner are getting along and treating each other fairly throughout the divorce proceedings, your mortgage lender could throw a monkey wrench into the works. Divorcing couples usually sell their home or have whoever is keeping it refinance the mortgage. When these options aren't feasible, the two of you could work together to rent the home or negotiate a short sale. Your options are limited, but you do have a handful of legal avenues to choose from.
California and Community Property

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When you do, use the sale proceeds to pay off the mortgage. If you make a profit, split it 50/50. If you come up a little short, each of you should pay half of the deficit. Some divorcing couples find themselves upside down in their mortgage, owing more than what the home is worth. In this case, selling could leave you owing more than you can afford to cover. In this instance, see if your lender will agree to a short sale. In a short sale, the lender lets you sell the home and accepts the price you get as satisfaction of your mortgage, forgiving the remainder of the debt. Remember that your lender must approve any offer you get on the home during a short sale and can turn down offers it deems too low. A short sale also results in your lender forgiving part of your loan, and forgiven debt is …show more content…

If, for example, you're upside down in the home and the bank won't agree to a short sale, keeping the property until the market turns around is a smart option. If you rent the home to someone else, their rent can cover your mortgage until you're in a better position to sell. If you go this route, it's important to put in writing who will collect the rent money and what they are to do with it. If your former spouse collects a rent check and fails to pay the mortgage with it as agreed, your lender will still have the right to come after you for the mortgage payment. You, however, will have the right to pursue your ex for failing to stick to your agreement. Clearly, this arrangement won't work if you and your former spouse just can't get along or work together. Renting until you sell makes a great option, however, for divorcing couples who are able to split

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